You may be able to take a tax
credit of up to $10,390 for qualifying expenses paid to adopt an eligible child
(including a child with special needs). The adoption credit is an amount
subtracted from your tax liability. The adoption credit is not available for
any reimbursed expense. In addition to the credit, you may exclude up to $10,390
paid or reimbursed by your employer for qualifying adoption expenses.
The income limit on the adoption
credit or exclusion is based on your modified adjusted gross income (modified AGI).
If your modified AGI
is $155,860 or less, the income limit will not affect your credit or exclusion.
If your modified AGI
is more than $155,860, your credit or exclusion will be reduced. If your modified AGI is
$195,860 or more, your credit or exclusion will be eliminated.
Many states all have adoption tax
credits. Go to your state’s government page (can usually be found by using this
URL, www.state.yourstate.us, and
substituting your state’s name or initials for “yourstate”)
then searching on the word “adoption”.
Adoption subsidies, also known as
Adoption Assistance Payments (AAP), are monthly payments made to parents who
adopt children with special needs from the
foster care system. The subsidy is designed to defray some of the costs
associated with raising children and is determined by the severity of the
child's disabilities, not by family income.
These payments are not taxable. The
average base amount nationwide is about $350.00 per month.[7]
Go to the National Council on Adoptable Children website, http://www.nacac.org/subsidy_stateprofiles.html
to get a state-by-state profile on the adoption subsidy program.
Subsidies are not available for
children adopted internationally.
